Obama unveils plan to make college more affordable

President Barack Obama on Thursday proposed a new plan to tackle soaring higher education costs with a system that would rate colleges and universities based on their value for the money students spend.

U.S. President Barack Obama waves from Air Force One at Andrews Air Force Base near Washington, August 22, 2013. REUTERS/Jason Reed

President Barack Obama on Thursday proposed a new plan to tackle soaring higher education costs with a system that would rate colleges and universities based on their value for the money students spend and tie those ratings to disbursement of federal student aid.

The president, who has spent much of the summer trotting out new ideas to rev up the economy, will unveil his proposals at the start of a campaign-like bus tour through New York and Pennsylvania that will include speeches and a question-and-answer sessions with students.

Tuition costs at U.S. colleges and universities have been skyrocketing, forcing students and families to take on more debt to afford a college degree.

The average cost of in-state tuition and fees for 2013 at four-year public universities was $8,655, up 4.8 percent from 2012, according to a survey from the College Board released this month.

Obama's plan would institute a ratings system before the 2015 school year that would allow students and parents to select schools based on the best value.

It would push Congress to tie federal student aid to college performance, creating an incentive for schools to keep their costs in check.

The plan would also include provisions allowing those paying off student loan debt to limit their payments to 10 percent of their monthly income.

"The president's plan will also take down barriers that stand in the way of competition and innovation, particularly in the use of new technology, and shine a light on the most cutting-edge college practices for providing high value at low costs," the White House said in a statement.

According to the National Center for Education Statistics, the total cost of higher education - including tuition, room and board - for undergraduates at four-year public institutions ballooned 73 percent to an average of $15,900 in 2011 compared to 2001.

Americans now owe about $1.2 trillion in student loan debt, the Consumer Financial Protection Bureau estimates. If the costs put college out of reach for too many young people, the United States could find itself at a disadvantage compared to other countries.

Obama earlier this month signed legislation that reversed a big hike in student loan interest rates and will tie future rates to fluctuations in the 10-year Treasury note. The bill was hammered out in intensive negotiations with lawmakers.

Obama has continued to decry the rising cost of college and has urged both public and private colleges to try to tackle the problem.

Over the last five years, the president has rolled out a number of college affordability initiatives, including increasing Pell Grant aid to low-income students, steps to encourage colleges to be more transparent about costs, and awarding grants to states and institutions that work to bring costs down.